Why philanthropy is the missing link in employee wellbeing

Across industries, employee wellbeing has moved from a ‘nice to have’ to a business imperative. But while many organizations are investing in mental health apps, flexible work arrangements and burnout prevention strategies, one powerful lever remains underutilized: philanthropy.

The wellbeing crisis

Employee wellbeing is in crisis, and it’s hurting business outcomes. According to Gallup’s 2023 ‘State of the Global Workplace’ report, 44 percent of employees worldwide said they experienced "a lot of stress" the previous day, a number that has remained alarmingly high since 2021.

In the United States, burnout is one of the top three reasons employees cite for quitting their jobs, a McKinsey Health Institute survey reports. The industries hardest hit – healthcare, education, tech and financial services – are also some of the most critical to economic and societal infrastructure.

A 2023 study from Perceptyx found that workers in healthcare reported the lowest levels of wellbeing, with under a third saying they feel mentally and emotionally well at work. Even in high-paying sectors like tech and finance, fewer than half of employees report high levels of wellbeing.

The cost of low wellbeing is staggering. Gallup estimates that low engagement – often a symptom of poor wellbeing – costs the global economy US$8.8 trillion in lost productivity annually. That’s nearly nine percent of global GDP.

The standard playbook

Most companies leverage the Job Demands-Resources model to guide their wellbeing strategy. The goal is to ensure that resources outweigh demands, and thus many companies have invested in wellness stipends, counseling services, mental health days, workplace flexibilities and wellbeing workshops.

These efforts are important and necessary, but they don’t address the root causes of dwindling wellbeing – one of which is loss of meaning and purpose. According to McKinsey, 82 percent of employees believe organizational purpose is important, but only half that number said their purpose has an impact. Simply put, meaning is one of the most powerful resources we have, but for most employees, it’s missing.

Purpose drives performance

Decades of research show that a sense of purpose is linked to better physical health, increased resilience and greater overall life satisfaction. According to a 2021 study published in the American Journal of Health Promotion, people with a strong sense of purpose are more likely to engage in healthy behaviors, experience lower rates of depression and have higher levels of optimism.

In the workplace, a clear connection to purpose correlates with increased motivation, job satisfaction and performance.

One especially compelling example comes from a study by Adam Grant at the University of Pennsylvania. Call center employees, who had the opportunity to meet a scholarship recipient whose tuition they helped fund, saw a 171 percent increase in weekly phone time and a 142 percent increase in revenue. Simply seeing the impact of their work transformed motivation and wellbeing.

This isn’t limited to individual anecdotes or isolated studies. A 2020 McKinsey report found that employees who feel their purpose is aligned with their organizations are more engaged, more loyal and significantly more likely to stay.

The philanthropy connection

So, how can companies tap into the energy of purpose in a structured, scalable way?

One powerful answer is through philanthropy.

Corporate philanthropy, when integrated with employee engagement, provides a tangible way for employees to contribute to something bigger than themselves. Whether it’s matching employee donations, sponsoring volunteer days or creating employee-led grant-making committees, these initiatives help employees connect their daily work with real impact.

Giving is not just good for society – it’s good for us. Research from the University of British Columbia and Harvard Business School has shown that people who spend money on others report significantly higher levels of happiness than those who spend it on themselves.

In one experiment, participants who were given US$20 and asked to spend it on others experienced greater happiness than those who spent the same amount on themselves.

The same principle applies at the organizational level. A 2022 report by Benevity found that employees who participate in workplace giving and volunteering programs are more likely to feel engaged and proud to work for their employer.

Philanthropy in action

I’ve seen this dynamic firsthand as the Founder of Rock Recovery, a nonprofit that provides community-based mental healthcare, bridging treatment gaps and making care accessible to all. Over the years, a number of corporate sponsors have come to our side to support our cause. I recently asked one of these sponsors, the financial software company Xero, to share how their support for Rock Recovery impacts their employees’ wellbeing.

Lucas Finch, Xero’s Director of Wellbeing and Engagement, offered the following insights:

"Philanthropy is a powerful driver of a healthier and more connected workplace culture. When employees believe in something larger than themselves, it fosters intrinsic motivation and inspires discretionary effort.

"Of course, this isn’t a new concept; the positive connection between volunteering and mental health has been recognized for decades. We at Xero have tapped into the special sauce that benefits employees, our organization and our mission to improve the lives of small businesses around the world."

When people see that their employer is contributing to a cause they believe in, it reinforces their own sense of purpose and wellbeing.

What’s more, we’ve heard time and again that supporting smaller, local nonprofits like Rock Recovery is especially meaningful to employees, who can see how even modest donations directly support our community through therapy sessions, recovery groups or outreach programs. That sense of tangible impact reinforces the connection between their work and the difference they’re making in the world.

Steps for leaders

For CEOs and senior leaders, the implication is clear: If you want to boost employee wellbeing, give employees the opportunity to impact the causes that they’re passionate about. In other words, boost your philanthropy.

 

Here are a few ways to get started:

• Involve employees from the ground up. Don’t tell them what you did – enable them to get involved in meaningful ways, leveraging their own strengths and passions, so they share in the wins. For example, Xero invited employees to help shape its social impact strategy, Xero For Good, with more than 100 team members contributing beyond their regular roles, driven by a shared purpose to support small businesses and their communities.

• Align philanthropy with employee passions. Let employees choose where to give, for example, through participatory grant-making, matching gift programs and volunteering. When developing Xero For Good, the company saw that employees wanted to impact their local communities, so they created regional office funds to support donations and partnerships with local nonprofits.

• Build a community around giving. Exponentially increase your impact by boosting meaning while also tackling the loneliness epidemic. Host service days or team-based volunteer projects and use these opportunities to build meaningful connections. Here again, Xero offered a great example: at its first global volunteering event, more than 1,150 employees volunteered in 162 activities across 78 local charities. Those who participated reported that the event united them in meaningful service, boosting connection, positivity and pride in the company.

• Support small and local. Giving to small, nimble nonprofits can offer employees a clearer view of impact and a deeper sense that their contributions are having a meaningful impact.

 

Philanthropy isn’t just an external strategy, it’s an internal asset. When companies embrace giving as a pathway to wellbeing, they unlock one of the most renewable, joyful and motivating resources available to any workforce: the power of purpose.

Opinions expressed by The CEO Magazine contributors are their own.